A Massachusetts state lawmaker and a city mayor, both Democrats, now face federal indictments for allegedly stealing hundreds of thousands of dollars in pandemic relief money meant for struggling workers and small businesses.
Federal authorities arrested State Rep. Francisco Paulino early Wednesday morning on 11 counts of pandemic unemployment insurance fraud, pandemic loan fraud, and money laundering. The charges cap a month that already saw the FBI arrest Lawrence Mayor Brian DePeña on a separate but strikingly similar 11-count indictment, Fox News reported.
Paulino allegedly devised a scheme to grab more than $700,000 in federal pandemic funds. DePeña allegedly obtained more than $1.5 million in COVID small-business loans. Both men held public office while the alleged fraud unfolded. Both allegedly started in 2020, when Americans were losing jobs, closing businesses, and lining up at food banks.
U.S. Attorney Leah Foley laid out the allegations against Paulino in blunt terms. She said the state representative signed up for COVID relief funding on behalf of "an unwitting 77-year-old relative", someone who apparently had no idea their name was being used.
Foley said Paulino then funneled the money into his own pockets:
"According to the Paulino indictment, Mr. Paulino devised a scheme to obtain more than $700,000 in federal pandemic relief funds. It is alleged that Paulino used some of the money for his own personal use, including real estate expenses, loan payments and transfers to his campaign account."
He didn't stop there, according to prosecutors. Paulino allegedly took the low-interest pandemic loan money and re-lent it to other people at higher rates, turning taxpayer-funded disaster relief into a private lending operation.
Foley added that Paulino "flipped around and lent to other individuals at higher interest rates than the pandemic loan rate." Real estate payments, campaign cash, and a side hustle as a loan shark, all allegedly bankrolled by funds Congress appropriated for Americans who couldn't pay rent or keep the lights on.
The Washington Examiner reported that Paulino used his tax preparation company, Madison Tax, to fraudulently obtain unemployment benefits and Economic Injury Disaster Loans from April 2020 through December 2021. That detail adds a layer: Paulino allegedly exploited his professional knowledge of federal benefit applications to run the scheme.
DePeña's arrest came roughly a week before Paulino's. A federal grand jury handed down an 11-count indictment charging the Lawrence mayor with pandemic loan fraud and money laundering. The FBI said DePeña began "diverting public funds" in 2020, when he served on the Lawrence city council, before he became mayor.
DePeña allegedly applied for pandemic funds on behalf of Tenares Tire Services Inc., his tire shop in Lawrence. The alleged fraud totaled more than $1.5 million in COVID small-business loans, according to the Fox News report on the dual cases.
Two elected Democrats. Two separate federal indictments. Two alleged schemes that began the same year, in the same state, targeting the same emergency programs.
Foley did not hold back about what the cases represent. She drew a direct line between the alleged fraud and the Americans who went without:
"Everyone listening today knows how difficult it was for Americans during the pandemic. The money these two individuals allegedly scammed was meant for hardworking Americans and struggling business owners, not for two greedy individuals who lied and stole for their own personal benefit."
She followed with a pointed warning aimed at officeholders who think their positions shield them from accountability:
"It is never a proud moment when we arrest a public official, but we will continue to do it until the message is received: No one is above the law, and no one gets a pass."
FBI Special Agent Ted Docks was even more direct about the pattern. He said both men "are accused of treating the COVID-19 pandemic as their own personal cash cows." Foley echoed that posture, saying her office is "dialed in and laser-focused on rooting out every bit we find" and will "continue to hold fraudsters accountable until the stealing stops."
COVID relief fraud is not a victimless accounting error. Every fraudulently obtained dollar, as the FBI emphasized, represented money denied to citizens who genuinely needed pandemic assistance, workers furloughed through no fault of their own, small-business owners burning through savings, families choosing between groceries and utilities.
Paulino and DePeña held positions of public trust. They swore oaths. They collected government salaries. And if the indictments hold up, they spent 2020 and 2021 allegedly looting the very programs their constituents depended on, while those constituents masked up, stayed home, and played by the rules.
Neither man has entered a plea, and no defense statements appear in the public record so far. The cases are separate investigations, and the specific statutes and court dockets have not been publicly detailed beyond the broad charge categories.
Several questions remain open. Did anyone in state government flag the applications? How did a sitting lawmaker's tax preparation company process fraudulent benefit claims for over a year without detection? And how many more cases like these are still sitting in federal investigators' files?
Pandemic relief was an emergency measure built on trust, trust that the money would reach the people who needed it most. When the people writing the laws are the ones allegedly breaking them, that trust doesn't just erode. It collapses. And taxpayers are the ones left holding the bill.
